Product Search Engine Reveals the Rate of Price Inflation on Chinese E-Commerce Sites

Chinese product search engine eTao, which is run by Alibaba, has revealed the rate of price inflation on China’s top e-commerce sites.

Just as with the nationwide inflation rate [1] – better known as CPI in China – eTao has analyzed a set collection of goods and then compared how the prices have risen from the end of January to the end of February. It was found that the average rate of price inflation over that month was 1.43 percent, up from an infinitesimally small 0.19 percent hike that occurred between December 2011 to January.

Only one local e-commerce site saw its bundle of goods rise by more than that 1.43 percent baseline – 360Buy, China’s second-largest B2C site, saw its own CPI figure rise by 4 percent. Market leader Tmall saw its price average remain the same, while Amazon China saw its commodity prices fall 1 percent. The biggest drop was on Suning’s (SHE:002024) website, where the bricks-and-mortar retailer aggressively dropped prices by 4 percent as it aims to make a bigger name for itself online.

This report will no doubt enrage execs at 360Buy, who have in the past slammed eTao’s e-commerce inflation stats as slanderous. At the core of the beef between 360Buy and eTao is the fact that the product search engine is owned by Alibaba, which is itself China’s largest e-commerce company – the rival here implying that it’s not entirely impartial. Last year, 360Buy blocked eTao’s web spiders from indexing products on its site.

[Source: Chinabyte - article in Chinese]

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1. China’s actual national rate of inflation stands at 4.5 percent at Januray 2012 (the newest figure available), pushed up by soaring food and real estate costs. ↩

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Eight: A Business Card Contact Management Platform from Japan

Exchanging cards is a big part of business etiquette, especially in Japan. A Tokyo-based venture company called Sansan is known for providing a combined solution of business card scanning, data entry, and a web-based contact management system. It’s intended for offices with employees suffering from managing an enormous number of cards from potential clients.

In order to use the service, users are required to rent a Windows mobile device as a scanner. When an employee comes back to his/her office, they set the cards collected on the device to have them scanned. Scanned images are securely transfered via the Internet to Sansan where operators are standing to enter profiles.

Recently the company introduced a new style of a business card-based human relationship management platform specifically designed for individual users. It’s called Eight. It’s integrated with Facebook, Google+ and Mixi, and available via an iPhone app as well as on the desktop. If you have a connection with someone on any of the supported social networks, they will be automatically connected on the Eight platform as well. Their profiles will be listed as your contacts with the scanned images of their business cards.

If you meet someone whom you have never no contact on social networks, you may capture an image of their card with the app, and they will be connected with you after the company completes the data entry process based on the card image transfer. The process is totally manual, but the company charges no fee to the users because it intends to find a variety of potential business opportunities through the service. They have know-how on cost reduction and human operations, Sansan’s marketing manager Hiroshi Edward Senju explains.

They have launched the service in Japan first, and are planning to expand it to Asian countries next year, where exchanging business cards tends to be a little more important than in the rest of the world.

 

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Report: China Group Buying Sales Hit US$213M in Jan, Up 255% YOY

China group buying market hit US$ 213 million (RMB 1.35 billion) in sales in January of this year, up 255% yoy, according to a report by Tuan800.com, a daily deals aggregator slash group buying market researcher.

The report has found that local services represented over 84% of all deals, or US$ 174 million (RMB 1.1 billion), highlighting Chinese group buying marketing has been marching towards a new phase where daily deals are more about local merchants rather than online shopping (check out Taobao’s Juhuasuan, whose deals are mainly consist of items sold online through Taobao Marketplace). The former is more of ‘ from online to offline’, the original idea behind group buying.

According to tuan800.com, as of late January there’re 3790 in the market, plunged from the peak of nearly 6000 in last year. And the Top 10 (see chart 1) grabbed more than 92% of the market in total, leaving the remaining 3780 Chinese daily deals sites in scramble for the less than 8% market, the status quo shows that a more serious market consolidation is a sure thing to come up in this year. Tuan800 estimated that the consolidation will be coming in the second quarter.

chart 1: China Daily Deal Services Top 10 (RMB Yuan)

 

As for cities, Shanghai (RMB 145 million), Beijing (RMB 133 million) and Guangzhou (RMB 57 million) the three tier one cities ranked in the top 3 in terms of sales with Shenzhen, Tianjing, Chongqing, Chendu, Xi’an, Nanjing and Hangzhou following.

Also, amid the Top 10 service, Meituan was assessed as the “Best Service Quality” winner, according to a Tuan800 survey.

 

Related posts:

1. Meituan Snags up Former Alibaba VP as COO
2. 24Quan Aaron Du: We’re Restructuring to Be the First Profit-Making Group Buying Service in China
3. Meituan Came in First in October with Sales Over $27M

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Instagram Supports Japanese Social Networks Mixi

iPhone social camera app Instagram announced on its official Twitter account that it now supports Mixi, Japan's largest real-side(as opposed to game-centric Gree/Mobage) social networking service.

Hey Japan & Mixi users! We've added support in v2.2. Download the update to start sharing to your Mixi account now: http://t.co/FexfAJnU

2012/03/01 18:30:25 via Buffer

Instagram

instagram

Blog OldLifehack reported how it looks [J],

The uploaded photos will be uploaded to your diary section on Mixi.

Although tech-savvy do not like Mixi any more, majority of Japanese web users are still in Mixi, who could be loyal users in compare to tech-savvies who hops around new services every month. Even if those Mixi users migrate from feature phone to iOS, Mixi to Twitter (or Facebook?), showing some concerns on Mixi users is worth doing to be competitive.

The version 2.2 also supports China's Weibo.

Instagram Supports Japanese Social Networks Mixi

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How to draft a good Memorandum of Association (MoA)?

Memorandum of Association (MoA) is an integral and important document associated with Limited companies. Entrepreneurs are generally puzzled as to what constitutes a good MoA and how should we draft it.

To simply put it in a line, MoA is a document which captures what activities your company can do.

Many entrepreneurs are of the view that we should be able to do almost anything under the sun, many want a much focused MoA and are sceptical that including many activities might be viewed as a defocussed company by future investors/ stakeholders. Both the approaches are extreme and it might be useful to take the mid-way at times.

When we start a business, we start with an idea and are typically passionate about doing that only. During the lifecycle of the business, the idea may need changes to align with market needs, feedback and accommodate new opportunities. Take the case of Flipkart. It started with selling books online but today they are selling a diverse set of products and also doing a decent amount of building supporting infrastructure, distribution chain etc.

Here are few points which may help you to decide on a MoA which has ample flexibility to accommodate the vibrant nature of the world today:

1. Major Focus areas (Main objects) – Every company should have a strong flavor of what you wish to do in the immediate future. This also impacts the name of your business, as registering authorities look at this to decide whether your proposed name is in consonance to the main objects. E.g. Reliance Telecom Ltd – from name you can make out that this company may be in telecom related domain. Reliance Industries Ltd suggests something related to manufacturing. Reliance Capital Ltd suggest an activity in to finance or capital markets. Similarly if you look at words like systems, infotech, labs, solutions, technology etc. you guess that this may be a company focusing on IT related activities and not on trading or manufacturing or some other sector.
2. Including generic terms– It may be a good idea to present your activities in a little more generic term instead of very focused or narrow words. E.g. If you are going to be in IT domain, you can use the generic words like IT, software, hardware, web etc. Look at these 2 small intercept of objectives:
   1. The company shall focus on designing & creating videos, problem solving techniques & tutorials to help improve mathematical skills of students.
   2. The company shall focus on design, development, architecting, creating videos, interactive programs and other contents to help improve problem solving skills, personality development, IQ enhancements and put these skills to practical use by using innovative tools & channels of IT, web, mobile and other online & offline techniques & tools to cover wider set of audience in India & abroad.
3. Supporting activities – List of activities which support or play an important role in supporting your main objectives. E.g. ability to enter into tie-ups, agreements, contracts etc., ability to buy shares, form companies, acquire IPs, takeover, merge, indemnify officers of the company, form trusts, associations etc., bid for tenders, open offices in other countries, do international business etc.
4. Social responsibility – A company is also known for extending their support to society in whatever fashion they can. Recently with new guidelines, public limited companies are required to spend x% of their revenues on corporate social initiatives. It is challenging for startups to budget for these activities. Nevertheless, it helps to create decent provisions to include some of these activities including charitable causes to be part of MoA. Including these, do not require you to spend on the same, but rather gives flexibility to spend on these activities whenever you feel you have room for the same. It also helps project your social responsibility face and intent of the company and in a subtle way help create a long term branding.
5. Related activities – It is important to comprehend a wide set of related extensions and activities in various areas you are currently operating. It may also be a good idea to have some diversification here to have a better flexibility and control to make changes to your existing business or adapt newer activities as you go along. This becomes more important if the initial set of activities planned donot work out the way you had anticipated. Donot try to have everything under the sun, as the registering authorities and other stake holders donot view this favourably but at the same time donot restrict or narrow down activities drastically. An experienced CA/ expert can help you achieve a right set of activities in close consultation with you.
6. Format of document – MoA need to follow specific formats and guidelines to satisfy various legal and compliance needs. It is always advisable to take help of an expert in drafting this.
7. Making Changes to MoA – When the business needs to change drastically, even a well comprehended MoA may fall short to meet the new requirements. It is possible to make changes to MoA by following specified processes. You can also look at changing the name of the company to reflect your changing needs.

MoA is an important document and should be drafted carefully. This requires understanding your business model clearly and also possible set of supporting and related activities that will strengthen achieving your business goals. Talk to an expert and work closely with them, help them understand your requirements and draft a suitable MoA during your company incorporation.

[About the author: eLagaan offers end to end CA, CS, Business Legal & Payroll services for businesses. It specialises in formulating investor friendly structures & terms, staying compliant, setting up best practices desired by founders, investors & employees. This facilitates businesses to grow & scale with ease and stay fundable, saleable and compliant.]

- more legal resources for startups.

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News Roundup: RCom bags 300 Cr UID Contract

RCom has won the number repository and IT infrastructure contract for Aadhaar as part of a consortium led by HCL Infosystems. The total value of the contract (to be) carried out by RCom is expected to be in the range of Rs 200 crore – Rs 300 crore [source].

IT vendors including Accenture-NEC, L1 ID and Mahindra Satyam-Morpho lock horns with Unique ID Authority

Biometric vendors de-duplicating Aadhaar numbers have refused to work with Unique ID Authority of India after finishing their contract, next month. The vendors were eliminating duplicate or redundant information in the Aadhaar IDs at the price of Rs 2.75 per number fixed with the agency. The deadlock over price threatens to create an uncertainty for the second phase of enrollments, which starts post-April, for about 40 crore citizens, even as new service provider is yet to come on board and take over UIDAI’s IT operations.[source]

Aircel to renew $100 million deal with Nokia Siemens Networks

Aircel, the country’s fifth-largest GSM operator with nearly 60 million subscribers, will renew a $100-million outsourcing contract with Nokia Siemens Networks (NSN) to manage its mobile networks in seven circles. [source]

Trai suggests Rs 600 crore aid for BSNL’s rural operations

Telecom Regulatory Authority of India(Trai) has asked the Centre to provide cash-strappedBSNL with Rs 600 crore to sustain its loss-making wireline operations in rural India. While BSNL had sought support of Rs 2,580 crore annually, the regulator has recommended this interim amount be paid from the Universal Services Obligation Fund. Trai will study BSNL’s demands and decide on the annual subsidy after consulting all stakeholders.[source]

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Chinese Shanzhai Phone Sales in India are Nose-Diving

This Chinese-made G'Five G303 has triple SIM card support - just the kind of thing that used to be really popular in India.

Indian consumers’ love affair with cheap and gimmick-packed Chinese phones seems to be over, as reports emerge that all ‘shanzhai’ phones are seeing sales figures drop to hundreds of thousands per month rather than the millions that were being bought in the recent past. About 10 million mobiles are sold in India each month.

To back that up, the most successful Chinese phone manufacturer in India, G’Five – an unknown brand in China itself – has seen its own sales plummet in 2011. The Shenzhen-based company – which makes about 300 handsets, and claims to launch a new phone every two weeks – caused a stir in 2010 when it soared to second place in terms of phone sales in India, claiming an astonishing 21 percent market share, surpassing Samsung (005930:KS) and threatening to usurp Nokia (NYSE:NOK). But G-Five’s 2011 sales were a sorry ebb from that zenith, down to 8 percent [1], with Samsung rising to second in its place.

If G’Five slips any further, it’ll fall back into the obscurity of hundreds of other struggling Chinese and Indian cottage-industry manufacturers. But it does plan a fight-back, expanding its feature-phone line-up – albeit some with very large screens – to encompass some proper 3G-enabled smartphones. These are expected to hit shelves sometime this spring.

If shanzhai phones do fail in India, they’ll be following the pattern set in China, where Shenzhen-based phone makers are shutting in huge numbers, forced out of business – or forced out of the city, perhaps – by a mixture of police clampdowns, quality concerns on the part of consumers, and fancier cheap phones from major brands.

The cause of the downfall of shanzhai in India is harder to pin down. A Sina Tech report speculates that although the Indian government brought in new security legislation in late 2009 to require all phones sold to have a legitimate IMEI number, that wasn’t the sole reason for the fall. Yes, that would’ve squeezed out some of the shadier operators, but that’s no explainer for why G’Five and some other legitimate manufacturers have fallen out of favour with Indian consumers. In April 2011, Nokia filed a lawsuit against G’Five [2] for allegedly copying certain Nokia hardware design elements, which might have put off some buyers.

A quick search of India’s leading e-commerce site, Flipkart, is very revealing of the future of phone brands in India. In the Flipkart category listings there are 509 feature-phones and smartphones, but not a single one from G’Five. Instead, the product line-up is dominated by Samsung and Nokia, with a good amount of telco-branded phones from Spice and Micromax as well. Not counting which telco phones might’ve been made by Chinese OEMs, there are only two Chinese-brand phones for sale on the site, both from ZTE (HKG:0763; SHE:000063).

But the rise and fall of shanzhai phones will not be decided on middle-class Flipkart, and will instead lie in the fate of the crush of punters who pack the Karol Bagh-area electronics markets, looking for bargains.

[Source: Sina Tech news - article in Chinese]

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1. Both 2010 and 2011 stats from ABI Research. Nokia holds 37.2 percent share in India in 2011, with Samsung rising to 14.9 percent. ↩

2. It’s not clear what was the outcome of this suit. ↩

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